Madras High Court
Mettur Chemicals Podhu Thozhilalar ... vs Chemplast Sanmar Limited, Mettur on 11 July, 1997
Equivalent citations: (1997)IILLJ963MAD
Author: P. Sathasivam
Bench: P. Sathasivam
ORDER
1. The above writ petitions are filed by Mettw Chemicals Podhu Thozhilalar Sangam and Chemplast Employees Union, Mettur Dam for a relief of mandamus directing the respondent not to discontinue the existing benefits, namely regular fixed monthly payment, covered by the settlement dated November 27, 1992 without giving notice under Section 9A of the Industrial Disputes Act, 1947 (hereinafter referred to as "the Act"). The same may be disposed of by the following common order.
2. The case of the petitioner Union is that the respondent company has been making enormous profits and the workmen are outside the purview of the payment of Bonus Act. Hence, the management offered a fixed monthly payment to the workmen who were outside the purview of Payment of Bonus Act. In those circumstances, a settlement dated November 27, 1992 under Section 18(1) of the Act between the respondent and the various unions, providing for fixed monthly payment of 56.5 per cent of wages of April, 1992 every month For the period from April 1, 1991 to March 31, 1997 along with monthly wages. Rs. 500/- from the aforesaid amount is treated as fixed D.A., and P.F., Gratuity, overtime and medical reimbursement benefits are given on the said amount of Rs. 500/- treating it as fixed Dearness Allowance. The said settlement was in operation from April 1, 1991 to March 31, 1997. It is further contended that as the settlement was to expire on March 31, 1997 the petitioner gave a notice dated December 31, 1996, terminating the settlement dated November 27, 1992 under Section 19(2) of the Act. Thereafter the respondent sent a letter dated March 5, 1997 referring to the petitioner's letter dated December 31, 1996 terminating the settlement, stating that the continuation of settlement would have been in the best interest of both workmen and the management and since the union terminated the settlement, the monthly payment hitherto paid under the settlement will cease to be paid from April 1, 1997. Thereafter, the union placed a charter of demands dated March 20, 1997 demanding revision in the fixed monthly payment from 56.5 per cent to 120 per cent. Talks were held on many days, but the respondent is not willing to increase the quantum of monthly payment, which the workmen are receiving from April 1, 1991 onwards. According to them, the liability to pay monthly fixed payment ceased to exist from April 1, 1997 since the settlement was terminated. It is further submitted that the decision of the respondent to discontinue the existing benefits namely the monthly fixed payment, is altering the conditions of service to the disadvantage of the workmen. This will reduce the wages of the workmen. Section 9-A of Industrial Disputes Act places prohibition on so the employer to effect any change in the conditions of service of any workmen in respect of matters specified in the IV Schedule of Industrial Disputes Act, without giving notice, to the workmen likely to be affected, in the prescribed manner. There is a prohibition on both workmen and the employer to seek a fresh settlement during the currency of settlement and the parties have to terminate the settlement on its expiry under Section 19(5) of the Act, before seeking fresh settlement. It is settled law that without terminating a settlement on its expiry no fresh charter of demands can be placed. Finally it is submitted that the employer is bound to pay the benefits under the settlement even after its expiry/termination until a new settlementl award replacing earlier settlement. In those circumstances, they prayed for necessary direction for continuance of the existing benefits covered by settlement dated November 27, 1992.
3. The respondent has filed a separate but identical counter affidavit in both the cases. The main defence is briefly stated hereunder :- The present writ petitions are not maintainable on the ground that the respondent herein is a private employer and does not come within the meaning of State, therefore, not amenable to jurisdiction of this Court under Article 226 of the Constitution. On this ground itself the writ petitions are liable to be dismissed. Further, there is no change in service conditions of the members of the petitioner union and therefore, there is no question of invoking Sections 9-A of the Act. if the petitioner unions are aggrieved by the terms of settlement, then they have to approach the Labour Court and exhaust the remedies under the Industrial Disputes Act, before approaching this Court and on this ground also the writ petitions are liable to be dismissed. Regarding merits, the respondent contended that since there were disruption of work arising out of the bonus dispute and as the management proposed that they would strictly implement the provisions of Payment of Bonus Act, but would grant bonus, so that, the workmen who were enjoying the benefits of the Act, till such time that their salary exceeded the limit prescribed by the Bonus Act, would not he affected. The Unions had accepted the long term settlement and from April 1, 1991 onwards the settlement was deemed to have been accepted. It was decided that monthly allowance, lieu of the amount determined as bonus, would be an integral part of this arrangement. In terms of this settlement, it was decided that the management would give certain amounts exclusively as a long term arrangement from the commencement of the settlement for the period April 1, 1991 to March 31, 1997 and cease to exist on the settlement being legally terminated. These amounts as per the settlement would be paid as a separate monthly allowance to all permanent work-man on the roll. After the period of five years, it was to be deemed that the workers would not be entitled to any amounts under that settlement if terminated. While so, all of a sudden, the petitioners in their letter dated December 31, 1996 sought to terminate the settlement unilateral. They sought to seek bonus of 120 per cent which would have to be negotiated subsequently after the tenanation of the previous settlement and this bonus would become applicable and payable only by November, 1998. These amounts agreed in the earlier settlement were paid towards bonus and not as wages and it is incorrect for the petitioner to state that they were enjoying the benefits of the settlement as wages and not as bonus. In those circumstances, they prayed for dismissal of the writ petitions.
4. In the light of the above pleadings, I have 30 heard Mr. D. Hariparanthaman, learned counsel for the petitioner and Mr. Abibuila Bash, learned senior counsel for the respondent management.
5. The learned counsel for the petitioner submitted that the decision of the respondent to discontinue the existing benefits namely the monthly fixed payment in altering the conditions of service to the disadvantage of the workmen without compliance of Section 9-A of the Act cannot be sustained. In other words, he submitted that Section 9-A of the Act places prohibition on the employer to effect any change in the conditions of service of any workman in receiption of matters specified in IV Schedule of Industrial Disputes Act.
6. On the other hand, the learned senior 0 counsel for the respondent submitted that inasmuch as the writ petition itself is not maintainable, the respondent being a private employer, there is no need to consider the merits of the case. Even on merits, he submitted that inasmuch as the settlement dated November 27, 1992 has been terminated only by the petitioner, workmen, there is no question of payment of agreed amount as per the settlement. In other words, according to him, as per the settlement, extra amount was paid as special monthly allowance as bonus and not as wages during the years 1992-97. He further reiterated that these amounts were paid towards bonus and not as wages.
7. I have carefully considered the rival submissions.
8. In view of the objection raised regarding maintainability of the writ petitions, since the respondent being a private employer, first I shall deal with the question relating to maintainability. A Division Bench of this Court in a decision reported in Madras Labour Union v. Rinny Limited and Others (1995-1-LLJ-588) after analysing the entire case laws on this aspect in para 48 formulated established propositions in order to find out whether a writ would lie against private companies. The said propositions are extracted hereunder :-
"48. On an analysis of the above rulings, the following propositions emerge:
1. A private body which is not a "State" within the meaning of Article 12 of the Constitution of India is not generally amenable to Article 226 of the Constitution.
2. A writ will issue against a private body to protect the fundamental rights declared under Part III of the Constitution of India.
3. A writ will issue in extraordinary circumstances if the monstrosity of the situation warrants it.
4. A mandamus will be issued against a private body, if there is no equally convenient remedy and if there is a public duty.
5. The implementation of a settlement under v Section 12(3) of the I.D. Act is not a public f duty and no writ will lie against a private body.
6. If the features are patent and they establish c gross violation of the mandates of law, the jurisdiction under Article 226 of the Contribution could be exercised to quash, a settlement under Section 18(1) or Section 12(3) of the I. D. Act."
9. Relying on the said decision, the learned counsel for the petitioner contended that if there i is a statutory violation, it is open to the aggrieved workman to approach this Court even against private employer by invoking extraordinary jurisdiction under Article 226 of the Constitution of India. According to him, since there is a violation of mandatory provision, namely, 201 Section 9-A of the Industrial Disputes Act, as i per proposition No.6 in para 48 of the above referred decision, the present writ petitions are maintainable. He also submitted that if there is t a "monstrosity of the situation", this Court can,251 issue appropriate writ against the private employer. In this case admittedly most of the t workmen are placed outside the purview of the (Bonus Act. In those circumstances, in order to (safeguard their interests as well as in the interest of production and industrial peace, both the workers' unions and the management entered into a settlement under Section 18(1) of the Act on November 27, 1992 by providing fixed monthly payment of 56.5 per cent of wages Of April, 1992 every month for the period from April 1, 1991 to March 31, 1997 along with monthly wages. Further, Rs. 500/- from the afore-said amount is treated as fixed dearness allowance, provident fund, gratuity, over time 401 and medical reimbursement benefits are given i on the said amount of Rs. 500/- treating it as fixed dearness allowance. The settlement was i in operation from April 1, 1991 to March 31, 1997. Since the agreed period is to expire on 45. March 31, 1997, the petitioner union in order to get higher wages and other emoluments and to enter into a fresh settlement by letter dated December 31, 1996 sought to terminate the settlement. This was necessitated according to the 50 petitioner, under Section 19 of the Act, if the workmen want to enter into a fresh settlement for higher wages and other benefits without terminating the earlier agreement, it is not possible for them to negotiate with the employer. In those circumstances, they sent a notice on December 12, 1996 requesting the management terminate the settlement. On March 5, 1997 by referring the letter dated December 31, 1996 sent by the petitioner union, the management terminated the settlement and informed that the monthly payment hitherto paid under the Settlement will cease to be paid from April 1, 1997. Admittedly, after March 31, 1997 the settlement cannot be continued, since there is an outer limit fixed in the said settlement.
As per Section 19, without terminating earlier settlement, it is not possible for any of the parties to negotiate for fresh settlement vide L. L. C. v. D. J. Bahadur (1981-I-LLJ-I)(SC). A reading of the letter dated March 5, 1997 sent by the management clearly shows that after March 31, 1997 they are not going to pay the enhanced amount (according to them, it is only bonus, however, according to the workmen, it is a part of wages). As on the date of filing of the writ petition, admittedly no fresh settlement could be arrived at. In such situation, it is the case of the respondent-management that they will pay only the amounts prevailing prior to April 1, 1991 and only after negotiation if settlement is arrived, they propose to pay higher amount. In such a situation, the petitioner workmen having received monthly wages as well as some reasonable proportionate amount i in lieu of bonus from April 1, 1991 to March 31, 1997, the management would not be justified in dragging the workmen to their earnings which 3 was prevailing prior to the settlement, namely, prior to April 1, 1991. Further, as per the settlement, the respondent-management has s agreed to fixed monthly payment of 56.5 per cent wages of April, 1992 every month for the period from April 1, 1991 to March 31, 1997. If that is so, the respondent-management necessarily has to comply with Section 9-A of the) Act.
10. In order to appreciate the above aspect, I hereby extract Section 9-A of the Industrial Disputes Act :
"Notice of change.
9A. No employer, who proposes to effect any change in the conditions or service applicable to any workman in respect of any matter specified in the Fourth Schedule, shall effect such change, -
(a) without giving to the workman likely to be affected by such change a notice in the prescribed manner to the nature of the change proposed to be effected; or
(b) within twenty-one days of giving such notice :
Provided that no notice shall be required for effecting any such change -
(a) where the change is effected in pursuance of any settlement or award; or
(b) x x x x x x x x x x x x x ".
11. If the employer wants to effect any change in the conditions or wages applicable to any workman in respect of any matter specified in the Fourth Schedule, as per Section 9-A of the Act, they have to give notice to the workman. The learned counsel for the petitioner submitted that clauses 1, 2, 3 and 8 in Fourth Schedule attract in our case and more particularly, clause 8 is relevant for our decision. I hereby extract the concerned clauses in order to consider his submission :-
"Fourth Schedule Conditions of Service for change of which Notice is to be given :
1. Wages, including the period and mode of payment.
2. Contribution paid, or payable, by the employer to any provident fund or pension fund or for the benefit of the workmen under any law for the time being in force;
3. Compensatory and other allowances;
4. XXXXX
5. XXXXX
6. XXXXX
7. XXXXX
8. Withdrawal of any customary concession or privilege. or change in usage;"
Relying on clause 8 of Fourth Schedule, it is submitted that inasmuch as the respondent employer has suddenly stopped the customary concession or privilege of the payment of special amount, the action of the management would attract violation of Section 9-A of the Act. There is no doubt the workmen who were all along benefited are going to suffer or lose monetary benefit at the hands of the employer. In such situation, in order to safeguard their interest and protect their position, instead of resorting to the procedure contemplated under the Industrial Disputes Act, I am of the view that they are entitled to approach this Court by invoking the extraordinary jurisdiction under Article 226 of the Constitution of India to ventilate their grievance. If the above position is accepted, then as per proposition 3 and 6 in para 48 in Binny Mills case (Madras Labour Union v. Binny Limited (supra) clearly come into operation and it is open to the petitioner-workmen to agitate their grievance in these writ petitions. In the judgment dated October 14, 198-7 in W. P. Nos. 1258 and 1259 of 1983 Sathiadev, J. has also held the same view. In those circumstances, I hold that the present writ petitions against the respondent private management are maintainable.
Now, I shall consider the merits of the petitioners' case. As per the settlement dated November 27, 1992 in view of the fact that most of the workmen are placed beyond the purview of Bonus Act, in the interest of industrial peace is and for the benefit of the workers in particular. the management agreed to pay 56.5 per cent of wages of April, 1992 every month for the period from April 1, 1991 to March 31, 1997. No doubt, the learned senior counsel after taking me through the copy of settlement contended that the said amount was paid in lieu of bonus and it is not a part of wages. In view of the termination sought for by the workers union unilaterally, the respondent-management cannot be blamed. He further contended that for payment of bonus for 1997-98 or payment in lieu of bonus, the workers union have to come and negotiate with the management and arrive at a new settlement. It is true that by letter dated December 31, 1996 the petitioner union sought to terminate the earlier agreement dated November 27, 1992 on the ground that the period is going to expire on March 31, 1997 and also to arrive at a settlement. According to the learned counsel for the petitioner, after expiry of the earlier settlement till new settlement is arrived between the workers union and the management, it is but proper that the workers are paid the same wages amount as per the settlement which already expired. In support of his contention he heavily relied on a decision of the Supreme Court reported in L.L C. v. D. J. Bahadur (supra). Their Lordships of the Supreme Court after referring all the earlier decisions of the various High Courts as well as the Apex Court, has held in the following manner at p. 21 :
".... The inevitable consequence is that even though the period of operation and the span of binding force expires, on the notice to terminate the. contract being given, the said contract continues to govern the relations between the parties until a new agreement by way of settlement or statutory contract by the force of an award takes its place."
A similar situation arose in the above referred decision. In that case, the Life Insurance Corporation of India after expiry of the settlement refused to pay the enhanced amount as agreed in the settlement until a new settlement is arrived at. The following conclusion of their Lordships is very relevant for our case, hence the same is extracted hereunder :
"The core question that first falls for consideration is as to whether the Settlement of 1974 is still in force. There are three stages or phases with different legal effects in life of an award or settlement. There is a specific period contractually or statutorily fixed 96@ as the period of operation. Therefore, the award or settlement does not become honest but continues to be binding. This is the second chapter of legal efficacy but qualitatively different as we will presently show. Then comes the last phase. If notice of intention to terminate is given under 5. 19(2) or 5. 19(6) then the third stage opens where the award or the settlement does survive and is in force between the parties as a contract which has superseded the earlier contract and subsists until a new award or negotiated settlement takes its place. Like Nature, Law abhors a vacuum and even on the notice of termination under S. 19(2) or (6) the sequence and consequence cannot he just void but a continuance of the earlier terms, but with liberty to both sides to raise disputes, negotiate settlements or seek a reference and award. Until such a new contract or award replaces the previous one, the former settlement or award will regulate the relations between the parties. Such is the understanding of industrial law at least for 30 years as precedents of the High Courts and of this Court bear testimony. To hold to the contrary is to invite industrial chaos by an interpretation of the I.D. Act whose primary purpose is to obviate such a situation and to provide for industrial peace. To distill from tile provisions of S. 19 a conclusion diametrically opposite of the objective, intendment and effect of the Section is an interpretative stultification of the statutory ethos and purpose. Industrial law frowns upon a lawless void and under general law the contract of service created by an award or settlement lives so long as a new lawful contract is brought into being. To argue otherwise is to frustrate the rule of law. If law is a means to an end order in society - can it commit functional harakiri by leaving a conflict situation to lawless void ?"
12. The above proposition by the majority judgment in that case clearly shows that until new contract or award replaces, the previous one, the former settlement or award will regulate the relations between the parties. However, the learned senior counsel has brought to my notice Section 19 of the Act which speaks about period of operation of the settlement and awards. In order to appreciate his contention, hereby reproduce Section 19 :-
"Period of operation of settlements and awards.
19.(1) A settlement shall come into operation on such date as is agreed upon by the parties to the dispute, and if no date is agreed upon, on the date on which the memorandum of the settlement is signed by the parties to the dispute..
(2) Such settlement shall be binding for such period as is agreed upon by the parties, and if no such period is agreed upon, for a period of six months from the date on which the memorandum of settlement is signed by the parties to dispute, and shall continue to be binding on the parties after the expiry of the period aforesaid, until the expiry of two months from the date on which a notice in writing of an intention to terminate the settlement is given by one of the parties to the other party or parties to the settlement.
(3) An award shall, subject to the provisions of this Section, remain in operation for a period of one year from the date on which the award becomes enforceable under section 17A :
Provided .............
(4) Where the appropriate Government, whether of its own motion or on the application of any party bound by the award, considers that since the award was made, there has been a material change in the circumstances on which it was based, the appropriate Government may refer the award or a part of it to a Labour Court if the award was that of a Labour Court or to a Tribunal, if the award was that of a Tribunal or of a National Tribunal for decision whether the period of operation should not, by reason of such change be shortened and the decision of Labour Court or the Tribunal, as the case may be, on such reference shall be final.
(5) Nothing contained in sub-section (3) shall apply to any award which by its nature, terms or other circumstances does not impose, after it has been given effect to, any continuing obligation on the parties bound by the award.
(6) Notwithstanding the expiry of the period of operation under sub-section (3), the award shall continue to be binding on the parties until a period of two months has elapsed from the date on which notice is given by any party bound by the award to the other party or parties intimating its in is tention to terminate the award.
(7) No notice given under sub-section (2) or sub-section (6) shall have effect, unless it is given by a party representing the majority of persons bound by the settlement or award, as the case may be."
13. Relying on the said provision, the learned counsel for the respondent management submitted that inasmuch as the agreement has already come to an end even on March 31, 1997 at the instance of the workmen, there is no need to extend the benefits enumerated in the earlier settlement even after expiry. No doubt, the provisions under Section 19 of the Act support the argument advanced by the learned senior counsel. However, if we look into the entire provisions of the Act coupled with the various beneficial clauses in the earlier agreement as observed by Mr. Justice Krishna lyer in the three judges Bench decision viz., (1981-I-LLJ-1) (supra), at p. 15 "until such a new contract or award replaces the previous one, the former settlement or award will regulate the relations between the parties." His Lordship further observed that such is the understanding of industrial law at least for 30 years as precedents of the High Courts and of this Court bear testimony and to hold to the contrary is to invite in distrial chaos by an interpretation of the I.D. Act whose primary purpose is to obviate such a situation and to provide for industrial peace. Their Lordships in the majority of judgments have considered the various clauses ad so umberated in Section 19 and after analysing those conditions observed thus at p. 15 :
"To distill from the provisions of S. 19 a conclusion diametrically opposite of die objective, intendment and effect of the Section is an interpretative stultification of the statutory ethos and purpose. Industrial law frowns upon a lawless void and under general law the contract of service created by an award or settlement lives so long as a new d lawful contract is brought into being. To argue otherwise is to frustrate the rule of law."
The said conclusion and observation of their Lordships of the Supreme Court is certainly applicable to our case. In those circumstances, I am unable to accept the argument of the learned c senior counsel for the respondent. No doubt, he i has brought to my notice that the decision in (1981-1-LLJ-2) page 1 (supra) came to be rendered in a case where L.I.C. of Mia which is an instrumentality of the Central Government is a party. Hence, the principles laid down in the said decision are not applicable to the present case. In view of the fact that I have already taken a view that the present writ petition is maintainable against the Respondent management, certainly I am of the view that the conclusion and observation of the Apex Court in the said decision in (1981-I-LLJ-1) (supra), is applicable to the present case.
14. In the latest decision namely, Fabril Gasosa v. Labour Commissioner (1997-I-LLJ-872) two Judges Bench of the Apex Court has held thus at p. 877 :
"In the instant case, the period of earlier settlement of 1986 had expired by the expiry of that period would not affect the enforcement of the binding obligations flowing from the earlier settlement. The obligations arising from the earlier settlement would continue to remain in force, though as a contract and not as a binding settlement, but that would make no difference to the maintainability of a claim petition under S. 33C(1) of the Act so long as the requirements of that sub-section are satisfied and the obligations sought to be enforced flow from an earlier settlement or an award or under Chap. V-A or Chap. V-B of the Act."
15. The learned senior counsel relying on a decision reported in Patiala Central Co-op. Bank v. Their Workmen (1997-II-LLJ-631) (SC) submitted that once agreement was validly terminated, there is no possibility of implementing the earlier agreement. No doubt, the said decision of the Apex Court supports the contention of the learned senior counsel. lnview of his submission, I have carefully gone through the decision referred above and the same has been rendered in a different aspect and I am of the view that the said decision is not directly applicable to our case.
16. In view of the legal position as stated above, even though the earlier settlement expired on March 31, 1997 even at the instance of the petitioner workmen, I hold that expiry of the period would not affect the enforcement of the binding obligation flowing from the earlier settlement till substituted by a fresh settlement. Further to hold to the contrary in the words of His Lordship Justice Krishna lyer is "to invite industrial chaos by an interpretation of Industrial Disputes Act whose primary purpose, is to obviate such a situation and provide for industrial peace." Under these circumstances, I am in s entire agreement with the arguments of the learned counsel for the petitioners, consequently, both the writ petitions are allowed. No costs. I make it clear that allowing of the above writ petitions would not prevent the management and the workmen Union to negotiate and ri arrive at a reasonable settlement in accordance with law. It is also needless to mention that in the interest of industrial peace workmen have to t agree for a reasonable settlement and the petitioner unions have to make all endeavor to achieve the above object.